8 Ways to Minimize the Drama in a Family-Owned Business
Emotions can run high when working with relatives; use these 8 tips to minimize the drama.
It’s the American Dream: managing a thriving business in an industry you love while employing all your relatives to partake in the prosperity. Wait, what? Is that the American Dream? Some people might think that’s the America Nightmare, yet family businesses make up nearly 80% of all businesses in the United States. And they generate 60% of our nation’s employment so while it may sound scary to some, they’re doing something right. Millions of Americans build highly successful businesses by employing the people they trust the most: their family. And while emotions can run high at times, the overall consensus that we hear from our clients is that starting or inheriting a family business is the best thing they have ever done.
Statistics show that only 10% of family-owned businesses make it to third generation ownership and while it’s partly due to the challenges faced by all small business owners, dynamics, emotions, and poor succession planning may also be to blame. As a previous employee and owner of my own family business, I have compiled a list of 8 tips to help business owners minimize the drama and grow a company when working with relatives.
Establish Authoritative Figureheads: The source of a lot of squabbling in a family-owned business often stems from multiple relatives all wanting to make the final decision. To reduce this type of drama, elect one manager who has the final say over certain departments or situations. Sometimes it helps if this manager isn’t part of the family so that they can remain unbiased in the decision-making process. Discussions can still be had around certain issues, but everyone needs to respect the final decision made by the designated employee. There can only be one chief if anything is ever expected to get resolved.
Documentation: Holding family accountable in the work place can be hard…or sometimes, it can be too easy. Between family and regular employees, you need to treat everyone fairly and documentation can help establish a congruent sense of accountability. When it comes to contracts, job descriptions and goals and reviews, every employee needs this in writing. It can be tempting to fall into handshake agreements with family members, but keep everything simple by requiring the same documentation that you would of everyone else.
Require Previous Experience: Requiring relatives to have previous job experience is a great way to weed out any undesirable habits in the work place. Oftentimes, we hire relatives right out of high school or college to assume their role in the family business but they are missing a crucial career-building opportunity by not first taking up employment at a non-familial business. By first working in an environment where the employee will be treated just like everyone else, they are less likely to expect favoritism once they join your team.
“… the vast majority of the businesses we have sold have been family owned and operated.”
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Build a Diverse Team: The thing about family is that sometimes you share the same perspectives and views. Why wouldn’t you? You grew up together, attended the same events together, and sometimes even have the same people raising you. Because of this, you may find that in certain situations, it is difficult to find resolution because everything is exploring the same options. Cope with this by building a diverse team of non-family members who can offering differing perspectives and knowledge.
Equal Treatment: The biggest cliché that employees have about family employees is that they will be treated as the favorite. As the owner or manager, it is your responsibility to dispel this myth by treating everyone on your team equally. Playing favorites with relatives doesn’t foster a healthy company culture and will cause non-family employees to resent the family members. Combat this potential issue by treating every equally – the rules apply to everyone, the rewards apply to everyone, and everyone is held accountable for their responsibilities.
Communication: Communication is critical to any successful relationship but when it comes to managing relatives, its especially important. Open communication between employees will make for a great culture but you may need to take some extra time with family members. Emotions run high in situations like this and the best way to tackle that issue is to address is with open discussions. But the most important thing to keep in mind is how you frame what you are saying. Constructive criticism can be hard to hear from anyone, but it can be extra difficult when coming from a family member. Make sure that when you are correcting relatives, you are direct yet kind in your criticisms.
Hire the Right People: Lineage should never dictate roles at work. Prevent unnecessary drama by putting the right people in the right roles from the beginning. If that happens to be a family member, that’s great, but if not, do not allow the business and team to suffer in order to hire family. A good rule of thumb to exercise in this arena is to play to your employee’s strengths; especially when moving people into new roles.
Balance Relationships: When working with family, there will be times when personal topics are discussed at work and business topics are discussed at the dinner table. This is inevitable and okay, as long as you manage a balance between the two. Don’t let your work overflow into your family life and create tensions and try to keep the family drama out of the work place (as best as possible).
Managing a family business isn’t easy; the dynamics of our work life often mirror our personal lives when working with relatives. Family drama can interfere with professionalism and productivity at work if not properly managed, and unfortunately, work stuff can also affect family life. We hope that these 8 tips will help you minimize drama within your family business because at the end of the day, work isn’t just about work – it should be enjoyable too.